I'm the environment editor at Forbes. Before joining Forbes in April 2011, I wrote about all things green and tech as a contributor to The New York Times, a senior editor at Fortune and an assistant managing editor at Business 2.0 magazine. I previously was the business editor at the San Jose Mercury News and during the (first) dot-com era served as a senior writer and senior editor at The Industry Standard (RIP).

Solar Installers Caught In Cross Fire Of Escalating China Trade War

Will the booming U.S. solar installation industry become collateral damage in the growing solar trade war with China?

On Thursday, the U.S. Commerce Department issued a preliminary decision levying steep tariffs against Chinese solar manufacturers, finding they illegally dumped cheap photovoltaic cells on the American market. But the companies that install those solar panels on residential and commercial rooftops – and which have benefited from a 75% plunge in photovoltaic prices in recent years – are split over the impact of the tariffs on their burgeoning business.

“I don’t think this ruling will stymie the industry,” says Danny Kennedy, president of Sungevity, an Oakland, Calif.-based residential solar installer that has rapidly expanded to the other states and countries over the past two years. “Lower cost affordable solar is the goal here and while this is unfortunate trade politicking I don’t think the sky is falling.”

Sungevity obtains panels from China’s Suntech and other suppliers. “It’s not a big proportion; it’s a mix,” Kennedy says of his Chinese supply chain. “This is a market where you have supply-demand imbalance and we’re confident that cost curve will continue to come down.”

Susan Wise, a spokeswoman for another big solar installer, San Francisco-based SunRun, was less optimistic. “If finalized, this decision would move us backward in the effort to make solar affordable for Americans,” Wise said in an e-mail. “It would make prices higher at the exact moment when solar power is starting to become competitive with fossil fuels in more markets.”

Like most U.S. solar installers, Silicon Valley’s SolarCity uses Chinese-made photovoltaic panels. “Artificial cost increases designed to help a handful of companies at the expense of thousands of others in all fifty states simply don’t make sense,” Jonathan Bass, a SolarCity spokesman, said in an e-mail, noting his company employs 1,800 workers in a dozen states. “We make American-made panels available to any customer that prefers them.”

The solar trade war, which flared after the U.S. subsidiary of Germany’s SolarWorld filed an unfair trade complaint with the federal government, is far from over and a final decision is not expected until Nov. 23. SolarWorld and six other companies argued that the Chinese government unfairly subsidizes its domestic industry with cheap loans from state banks, favorable real estate deals and other incentives.

On Thursday, the Commerce Department hit Suntech, one of China’s biggest photovoltaic cell makers with a 31.22% tariff and found that Trina, Yingli and other Chinese manufacturers that have captured a significant share of the U.S. market should pay a 31.18% tariff. In 2011, Chinese companies exported $3.1 billion of solar cells to the U.S., according to the Commerce Department, which concluded that those manufacturers sold their products in the U.S. “for less than fair value.”

While SolarWorld and its allies hailed the tariffs as creating a more level playing field for the industry, some Chinese manufacturers characterized the Commerce Department as out of touch with the realities of the global solar market.

“As a global company with global supply chains and manufacturing facilities in three countries, including the United States, we are providing our U.S. customers with hundreds of megawatts of quality solar products that are not subject to these tariffs,” Andrew Beebe, Suntech’s San Francisco-based chief commercial officer, said in a statement Thursday.

Shayle Kann, vice president of research at GTM Research, says he expects other Chinese solar manufacturers to build factories overseas to avoid the tariffs.

“We think there will be some short-term disruption in the supply chain in the U.S. as installers figure out what they can and cannot procure, and as suppliers determine their strategies to deal with the tariffs,” Kann said an e-mail from China, where he is attending a solar trade show. “So while there may be a near-term impact on demand, we continue to anticipate substantial growth in the U.S. market this year and moving forward. We’re currently forecasting 75% installation growth in 2012, down from 109% in 2011.”

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.

Comments

Duh! Chinese run and funded cheap products!They are all turn key model that their government has been pushing. Look to all the Chinese junk imported into the US the last 15 years and it is all the same. The problem is China is a communist country! It would be like supporting the USSR during the cold war. Time will come to roost.

I thought America is for “Free Trade?” How come the current Administration cannot stop with the Government price controls (Medicare/Medicaid) and Trade Tarriffs? They have NEVER worked in the past for any long period of time. They ALWAYS lead to price increases. How about remove all of the burdens on our solar manufacturing companies so we can compete (no union labor, no minimum wage fees, no overtime regulations, minimal EPA requirements, reduce corp taxes, reduce competitive workman’s comp and other insurance). We could make them cheaper than China if the Government wanted. But they don’t!

Maybe because they don’t want to completely deregulate the business? See how well partial deregulation has been working in banking? And, yeah, you’ll get loads of folks willing to work tons of hours at slave wages in suspect conditions just to beat the Chinese? Wouldn’t it be easier (and cheaper in the long run) to build robots to do that work? No benefit hassles, no pensions, just a guy to turn the power on and off.

I find it deplorable that the US Department of Commerce would stifle the growth of American small business by putting a costly tariff on Chinese solar batteries. The only people this tariff will benefit will be big solar companies. The tariff will hurt not only small solar companies–in the US as well as China–it will also hurt low- and middle-income families that could use affordable solar power to ease their crushing energy costs. I’ve written a petition asking the Dept. of Commerce NOT to enact this tariff: http://www.thepetitionsite.com/889/224/728/don-let-us-kill-chinese-solar-power-industry/

If you agree, would you please sign it and feel free to share with friends.

Free trade under Autarky is always better than tariffs overall. We are all relatively better off even if a few firms are worse off (ahem fossil fuel companies forseeing long term competition) without the tariffs. Why shoot yourself in the foot just to hurt the competition?

As someone who is directly involved in this industry, I am stunned. This tariff imposition is truly illogical and extremely negative for the vast majority of those working in the solar technology industry in the United States. This ONLY benefits those who would rather see us chained like slaves to “dirty” coal, strategically-dangerous foreign oil, and “dirty” natural gas (40% as much air pollutants as coal – not to mention the criminally-dirty fracking process). Thousands of jobs will be lost by this action and, in addition to big oil, etc., it benefits a few poorly known solar panel manufacturers who, quite frankly, weren’t smart enough to move their manufacturing operations overseas when everyone else did. This will NOT save those manufacturers and they will be out of business within 2 – 3 years anyway. So, ultimately this benefits no one but the existing fossil fuel companies.

America’s future is in intellectual property, not low-wage manufacturing. We simply cannot compete in the manufacturing space. We CAN compete in R&D – developing new intellectual property, new products, new technologies, new ideas, which are the foundation of all wealth. However, even THAT is at risk as, unlike China and other aggressive economies, our “conservative” politicians would like to remove/reduce support for higher education, thus pushing us even further behind the rest of the world’s increasingly educated populations. Our scientists are being hired away by the Chinese, and other countries, to turn their economies from “copiers” to “innovators.” There is a political imperative in China to methodically shift their national cultural bias away from copying products, to innovating original products. This has bypassed the majority of Americans, including the politicians. I’m proud to be an American but sorry that America has seen it’s best days. Short-sighted politicians are pushing us further the behind the intellectually aggressive economies of the Far East.

Wow, none of the US critics of the decision appears to be contesting the underlying premise of the Commerce Department’s ruling — that the Chinese government is dumping product in violation of international law. I kinda like relying on the rule of law, and have faith in the actors to adapt around it — rather than chucking the law for expedient gain.